CARY, NC--(Marketwire - November 04, 2010) - Cornerstone Therapeutics Inc. (NASDAQ: CRTX) today reported net income of $0.8 million, or $0.03 per diluted share, for the third quarter of 2010, compared to a net loss of $0.5 million, or ($0.03) per diluted share, for the third quarter of 2009. On a non-GAAP basis, net income was $3.8 million, or $0.15 per diluted share, for the third quarter of 2010, compared to non-GAAP net income of $1.8 million, or $0.08 per diluted share, for the third quarter of 2009. Non-GAAP net income and EPS for the third quarter exclude amortization of product rights, acquisition-related expenses in connection with the Chiesi transaction, and stock-based compensation.
Total net revenues were $27.9 million for the third quarter of 2010, representing a 21% increase over the $23.1 million reported for the third quarter last year. Total net revenues for the first nine months of 2010 were $92.8 million compared to the $78.8 million for the first nine months of 2009.
Net product sales from strategic products were 63% of total net revenues, or $17.7 million, for the third quarter of 2010, a substantial increase from the 38% of total net revenues, or $8.8 million, for the third quarter of 2009.
"We continue to be pleased with the overall growth of the company, the advancement of our development projects and our movement away from legacy products," said Craig A. Collard, Cornerstone's President and Chief Executive Officer. "We continue to focus on building a portfolio of approved products with long-term growth potential which will enable us to provide enhanced value to patients and shareholders."
A breakdown of product sales for the third quarter (in thousands) follows:
Three Months Ended
September 30, Change
------------------ ----------------
2010 2009 $ %
-------- -------- ------- -------
Net product sales
Curosurf(R) $ 8,051 $ 2,153 $ 5,898 274%
Factive(R) 850 91 759 834
Spectracef(R) product family 1,194 1,554 (360) (23)
Zyflo(R) product family 7,574 5,034 2,540 50
AlleRx(R) Dose Pack products 3,812 3,541 271 8
HyoMax(R) product family 2,002 7,616 (5,614) (74)
Propoxyphene/acetaminophen products 2,935 2,949 (14) NM
Other products (8) 140 (148) (106)
-------- -------- ------- -------
Total net product sales 26,410 23,078 3,332 14
License and royalty agreement revenues 1,522 -- 1,522 NM
-------- -------- ------- -------
Net revenues 27,932 23,078 4,854 21
======== ======== ======= =======
Gross margin was 71% for the third quarter, compared to 82% for the comparable period of 2009. The lower gross margin compared to the prior period was due to a relatively higher portion of our net product sales in 2010 derived from products that have lower gross margins, primarily Curosurf.
Selling, general and administrative expenses decreased $0.3 million, or 3%, in the third quarter of 2010 compared to the third quarter of 2009. The decrease in selling, general and administrative expenses was primarily due to lower stock compensation and reduced legal and consulting costs, as compared to the third quarter of 2009 when we incurred significant expenses related to the Chiesi transaction. The decrease was partially offset by costs related to additions to our hospital sales force in September 2009, co-promotion expenses relating to Zyflo CR® and certain propoxyphene/acetaminophen products, as well as increased market research.
Royalty expenses decreased $2.0 million, or 43%, during the third quarter of 2010 compared to the third quarter of 2009. The reduction in royalty expense was primarily due to the reduction in net revenue from one of our legacy products, offset by increased royalties for Zyflo CR.
As of September 30, 2010, the Company had $49.7 million in cash and cash equivalents, an increase of $30.8 million compared to December 31, 2009.
Conference Call Information
Cornerstone Therapeutics will host a conference call today at 4:30 PM ET to discuss its financial results for the quarter and nine months ended September 30, 2010. Management will also provide an update on the Company's strategy, operations and product development pipeline. To participate in the live conference call, please dial 866-804-6927 (U.S. callers) or 857-350-1673 (international callers), and provide passcode 19358387. A live webcast of the call will also be available through the "Investors--Webcasts & Presentations" section of the Company's website at http://www.crtx.com. Please allow extra time prior to the webcast to register for the webcast and to download and install any necessary audio software.
The conference call and the webcast will be archived for 30 days. The telephone replay of the call will be available today at 07:30 PM ET, by dialing 888-286-8010 (U.S. callers) or 617-801-6888 (international callers), and providing passcode 43083287.
About Cornerstone Therapeutics
Cornerstone Therapeutics Inc. (NASDAQ: CRTX), headquartered in Cary, N.C., is a specialty pharmaceutical company focused on acquiring, developing and commercializing products primarily for the respiratory and related markets. The Company currently promotes multiple marketed products in the United States to respiratory-focused physicians, key retail pharmacies and hospitals with its specialty sales forces. The Company also has a late-stage clinical pipeline with a recent regulatory submission filing and four additional regulatory approval submissions targeted within the next three years. Key elements of the Company's strategy are to pursue acquisition or licensing transactions to acquire the rights to patent-protected, branded respiratory or related pharmaceutical products, or late-stage product candidates; to implement life cycle management strategies to maximize the potential value and competitive position of the Company's currently marketed products, newly acquired products and product candidates that are currently in development; to grow product revenue through the Company's specialty sales forces; and to maintain and strengthen the intellectual property position of the Company's currently marketed products, newly acquired products and product candidates.
Use of Non-GAAP Financial Measures
This press release highlights the Company's financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs and charges that are excluded from non-GAAP results. By publishing the non-GAAP financial measures, management intends to provide investors with additional information to further analyze the Company's performance and underlying trends. Management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.
Safe Harbor Statement
Statements in this press release regarding the progress and timing of our product development programs and related trials; our future opportunities; our strategy, future operations, anticipated financial position, future revenues and projected costs; our management's prospects, plans and objectives; and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Any statements that are not statements of historical fact (including, without limitation, statements containing the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "should," "target," "will," "would" and similar expressions) should also be considered to be forward-looking statements.
There are a number of important factors that could cause our actual results or events to differ materially from those indicated by such forward-looking statements, including risks relating to our ability to develop and maintain the necessary sales, marketing, supply chain, distribution and manufacturing capabilities to commercialize our products; our ability to replace the revenues from our marketed unapproved products, which we plan to cease manufacturing and distributing at the end of 2010; the possibility that the Food and Drug Administration (the FDA) will take enforcement action against us or one or more of our marketed drugs that do not have FDA-approved marketing applications prior to the end of 2010; patient, physician and third-party payor acceptance of our products as safe and effective therapeutic products; our ability to maintain regulatory approvals to market and sell our products with FDA-approved marketing applications; our ability to obtain FDA approval to market and sell our products under development; our ability to develop and commercialize our product candidates before our competitors develop and commercialize competing products; difficulties relating to clinical trials, including difficulties or delays in the completion of patient enrollment, data collection or data analysis; the results of preclinical studies and clinical trials with respect to our products under development and whether such results will be indicative of results obtained in later clinical trials; and the other factors described in Item 1A (Risk Factors) of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 4, 2010 and in our subsequent filings with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
In addition, the statements in this press release reflect our expectations and beliefs as of the date of this release. We anticipate that subsequent events and developments will cause our expectations and beliefs to change. However, while we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or investments that we may make or enter into. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this release.
Trademarks
Tussionex® is a registered trademark of UCB, Inc. Curosurf® is owned by Chiesi Farmaceutici S.p.A. Factive® is owned by LG Life Sciences, Ltd. Curosurf and Factive are licensed to Cornerstone Therapeutics for sales and marketing purposes in the United States and, with respect to Factive®, certain other countries.
FINANCIAL TABLES FOLLOW
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Net revenues $ 27,932 $ 23,078 $ 92,803 $ 78,776
Costs and expenses:
Cost of product sales
(exclusive of
amortization of
product rights) 7,742 4,143 22,714 10,245
Selling, general and
administrative 12,850 13,186 38,089 34,023
Royalties 2,600 4,593 9,846 16,535
Research and
development 1,047 691 3,748 3,041
Amortization of
product rights 3,595 1,507 10,785 2,528
----------- ----------- ----------- -----------
Total costs and
expenses 27,834 24,120 85,182 66,372
----------- ----------- ----------- -----------
Income (loss) from
operations 98 (1,042) 7,621 12,404
----------- ----------- ----------- -----------
Other expenses:
Interest (expense)
income, net (37) 1 (47) (113)
Other expense, net (25) -- (25) --
----------- ----------- ----------- -----------
Total other
(expenses) income (62) 1 (72) (113)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 36 (1,041) 7,549 12,291
Benefit from (provision
for) income taxes 728 503 (2,172) (4,776)
----------- ----------- ----------- -----------
Net income (loss) $ 764 $ (538) $ 5,377 $ 7,515
=========== =========== =========== ===========
Net income (loss) per
share, basic $ 0.03 $ (0.03) $ 0.21 $ 0.50
=========== =========== =========== ===========
Net income (loss) per
share, diluted $ 0.03 $ (0.03) $ 0.21 $ 0.46
=========== =========== =========== ===========
Weighted-average common
shares, basic 25,430,785 20,741,322 25,395,506 15,009,285
=========== =========== =========== ===========
Weighted-average common
shares, diluted 26,056,928 20,741,322 26,017,288 16,249,578
=========== =========== =========== ===========
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
September 30, December 31,
2010 2009
------------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 49,672 $ 18,853
Accounts receivable, net 15,845 16,548
Inventories, net 19,762 18,106
Prepaid and other current assets 3,024 4,808
Income tax receivable 991 --
Deferred income tax asset 3,858 3,507
------------- -------------
Total current assets 93,152 61,822
------------- -------------
Property and equipment, net 1,587 1,312
Product rights, net 116,271 126,806
Goodwill 13,231 13,231
Amounts due from related parties 38 38
Other assets 374 113
------------- -------------
Total assets $ 224,653 $ 203,322
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 9,344 $ 7,172
Accrued expenses 28,582 23,703
Current portion of license agreement
liability 1,227 1,019
Current portion of capital lease 81 10
Income taxes payable -- 1,606
Deferred revenue 9,195 --
------------- -------------
Total current liabilities 48,429 33,510
------------- -------------
License agreement liability, less current
portion 1,341 1,341
Capital lease, less current portion 167 39
Deferred income tax liability 3,496 4,564
------------- -------------
Total liabilities 53,433 39,454
------------- -------------
Stockholders' equity
Preferred stock -- $0.001 par value,
5,000,000 shares authorized; no shares
issued and outstanding -- --
Common stock -- $0.001 par value, 90,000,000
shares authorized; 25,442,596 and 25,022,644
shares issued and outstanding as of
September 30, 2010 and December 31, 2009,
respectively 25 25
Additional paid-in capital 159,720 157,745
Retained earnings 11,475 6,098
------------- -------------
Total stockholders' equity 171,220 163,868
------------- -------------
Total liabilities and stockholders' equity $ 224,653 $ 203,322
============= =============
CORNERSTONE THERAPEUTICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
--------------------------
2010 2009
------------ ------------
(Unaudited)
Cash flows from operating activities
Net income $ 5,377 $ 7,515
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and depreciation 11,070 2,695
Provision for prompt payment discounts 2,909 2,316
Provision for inventory allowances 199 506
Loss on sale of fixed assets 25 --
Stock-based compensation 970 2,970
Benefit from deferred income taxes (1,419) (4,664)
Changes in operating assets and liabilities:
Accounts receivable (2,206) (16,812)
Inventories (1,855) (5,271)
Prepaid expenses and other assets 1,523 (2,086)
Accounts payable 2,172 (2,186)
Accrued expenses 5,087 5,796
Income taxes payable (2,597) 228
Deferred revenue 9,195 --
------------ ------------
Net cash provided by (used in) operating
activities 30,450 (8,993)
------------ ------------
Cash flows from investing activities
Proceeds from sale of marketable securities -- 300
Proceeds from sale of fixed assets 2 --
Purchase of property and equipment (361) (250)
Purchase of product rights (250) (5,169)
------------ ------------
Net cash used in investing activities (609) (5,119)
------------ ------------
Cash flows from financing activities
Proceeds from exercise of common stock options 538 401
Proceeds from issuance of shares of common stock -- 15,465
Payments for cancellation of warrants -- (41)
Excess tax benefit from stock-based compensation 467 --
Principal payments on capital lease obligation (27) (7)
------------ ------------
Net cash provided by financing activities 978 15,818
------------ ------------
Net increase in cash and cash equivalents 30,819 1,706
Cash and cash equivalents as of beginning of year 18,853 9,286
------------ ------------
Cash and cash equivalents as of end of year $ 49,672 $ 10,992
============ ============
Supplemental disclosure of non-cash investing
and financing activities
Acquisition of product rights through equity
issued and liabilities assumed $ -- $ 110,050
============ ============
CORNERSTONE THERAPEUTICS INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data - unaudited)
The following tables show the non-GAAP financial measures used in this
press release reconciled to the most directly comparable GAAP financial
measures.
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
GAAP income (loss) from
operations $ 98 $ (1,042) $ 7,621 $ 12,404
Add: stock-based
compensation 315 305 970 1,157
Add: amortization of
product rights 3,595 1,507 10,785 2,528
Add: acquisition-related
expenses(1) -- 1,795 -- 3,263
---------- ---------- ---------- ----------
Non-GAAP income from
operations $ 4,008 $ 2,565 $ 19,376 $ 19,352
GAAP net income (loss) $ 764 $ (538) $ 5,377 $ 7,515
Add: stock-based
compensation 315 305 970 1,157
Add: amortization of
product rights 3,595 1,507 10,785 2,528
Add: acquisition-related
expenses(1) -- 1,795 -- 3,263
Less: tax effects related
to above items(2) (840) (1,316) (3,382) (2,703)
---------- ---------- ---------- ----------
Non-GAAP net income $ 3,834 $ 1,753 $ 13,750 $ 11,760
========== ========== ========== ==========
GAAP net income (loss) per
share, diluted $ 0.03 $ (0.03) $ 0.21 $ 0.46
========== ========== ========== ==========
Non-GAAP net income per
share, diluted $ 0.15 $ 0.08 $ 0.53 $ 0.72
========== ========== ========== ==========
Shares used in diluted net
income (loss) per share
calculation:
GAAP net income (loss) 26,056,928 20,741,322 26,017,288 16,249,578
========== ========== ========== ==========
Non-GAAP net income 26,056,928 21,679,818 26,017,288 16,249,578
========== ========== ========== ==========
(1) Acquisition-related expenses include legal, accounting and related
costs that resulted from or were incurred in connection with the Chiesi
transaction.
(2) Tax effects for the three months ended September 30, 2010 and 2009 are
calculated using effective tax rates of 21.5% and 36.5% respectively. Tax
effects for the nine months ended September 30, 2010 and 2009 are
calculated using effective tax rates of 28.8% and 38.9% respectively.
CONTACT:
Investor Relations Contacts:
Westwicke Partners
John Woolford
+1-443-213-0506
Email Contact
or
Westwicke Partners
Stefan Loren, Ph.D.
+1-443-213-0507
Email Contact
Media Relations Contact:
Fleishman-Hillard
Andrea Moody
+1-919-457-0743
Email Contact
